Does anyone else worry they have over-burdened / over-stretched themselves with their mortgage?(16 Posts)
DP and I are in our early 30s and bought our house a couple of years ago.
Before we bought we lived in London, but when we bought we left London so we could get more for our money and a decent sized garden. We still live in the South East so still very expensive.
We decided to buy a 'forever' home so we went for something that will be big enough if / when we have children as obviously moving and paying stamp duty is so expensive we decided to buy something we could potentially stay in for a long time. Also we have bought in a nice safe area which is within the catchment area for decent state schools, so if / when kids arrive we won't be forced to move again. This seemed like a sensible thing to do at the time. We did push ourselves to buy the best house we could afford, without being extravagant (it's only a three bed house, not a mansion or anything!).
We both have good jobs and earn good money and we did our sums carefully before we bought the house to make sure we could afford the mortgage repayments and also to make sure we could still afford them if interest rates go up (which they will at some stage) or if our circumstances changed slightly. We also both have income protection insurance through our jobs too.
However I am just a natural worryer I think and can't help but sometimes feel a bit sick at the sheer size of our mortgage repayments, especially when I speak to friends up north who have mortgages a couple of hundred thousand less than ours. I know it's just because the South East is so expensive and because we decided to stretch ourselves to get a family home rather than just a flat, which will hopefully prove to be a good decision in the future.
Am I alone or does anyone else feel like this too?
Not really. We've got a 3 bedroom house in the SE but really I think the repayments are cheap. We are paying less on a mortgage than we would renting.
Maybe have a look on rightmove and see what it would cost to rent a house like yours. At least in 20 years or so you'll finish paying for it.
Can you afford it on your present incomes? My only worry would be if you did have children you would feel like you had to go back to work before you were ready just to keep up repayments - so the phase between maternity leave and preschool for your youngest could be tricky to manage financially.
Yes we can afford it on our current incomes and we put some money into savings too each month. So we have a bit of 'cover' when interest rates go up.
Obviously I don't know this yet, but I imagine when I have kids I will want to work anyway as my industry is one that would be hard to get back into if I had a couple of years out as a SAHM. Although appreciate my views might change on that point.
Have just looked on Rightmove and you are right - it would cost us more to rent a 3 bed house in our area than our mortgage repayments. It really is shocking.
Well in the even of a financial stretch you could always let your house and squeeze into 2 bed flat. As you say the rent would cover your mortgage.
As far as the mortgage is concerned, I guess most of us is worried, but if you can afford like this and even save some, you are in a good position.
We stretched ourselves when we bought our current house 2.5 years ago. I do worry too...last year I had hideous job problems and was worried I would get fired (just after DH had applied for voluntary redundancy). Fortunately I found something else which paid more!
We overpay at every opportunity (bang went the redundancy money which means that our outgoings have gone down. Instead of paying out roughly £3500 per month (I know, outrageous), we are now down at about £2300. Ideally your payments should stay the same or decrease, and hopefully your income will increase, at least a bit. We have also fixed for 5 years, which may not have been the best decision interest rate wise, but at lease you have peace of mind.
If I was you I would overpay the mortgage, and not save towards additional interest payments in the future. The money you will save on the mortgage interest will be much greater than any interest you will get.
On the contrary, I think you are being very sensible as you seem to have covered all the negative scenarios you can think of. If you leave it any later to buy your "forever" home you will still be paying it off when you retire.
We also worried about the cost after having children (although we moved from owning to renting shortly after our first child). There's an element of hobson's choice about early childcare (i.e. before the gov help starts from age 3) - lose one income, or pay £1000 a month for chilcare (if talking full time)
It sounds as though you put a great deal of educated thought into your move. There are no guarantees in life, apart from death & taxes. Please try not to worry unduly - think about and have plan B in place, but try not to worry and enjoy your home/life. If you can save as well, you must be doing something right.
We were like you OP. The house we are in now we bought in 1999 when we were early 30s. It was a HUGE stretch over our budget but I am never intending to move unless circumstances force us.
I spent many years, especially when kids were small, fretting over the size of mortgage. DH lost a job, became self employed, changed jobs several times and each time was a nightmare BUT we are still here and <6m left on the mortgage!
My saving thought was that we always had equity and if necessary could sell up and move down. When you are overstretched on your 1 bed starter flat then it's a whole enw worry. My DD is now married and paying as much rent on a tiny place as we pay mortgage and I don't know how they will ever save a deposit for a mortgage.
Yes we could always sell up in the worst case, but as we are in the South East and paid over £20K Stamp Duty on top of the other buying and moving costs we would make a terrible loss if we sold in the next couple of years before the house gained any real value.
£3500 on the mortgage - respect.
Ours £2k but overpaying, I am addicted to those repay your mortgage early calculators, watching the term shrink magically.
You sound very sensible to me - as another poster said, overpaying on the mortgage while you can (i.e. before you have childcare costs or one of you becomes a SAHP) is a good plan. You could always let out a room in your house too for extra cash if you needed to.
We feel a bit like this TBH, even though we have borrowed less than three times joint income. I keep telling myself that it's no different to when I bought my first house, borrowing three times salary on my own, but the sheer amount of debt we have now scares me in case one of us wasn't in work. Which doesn't even make any sense, as if I'd lost my job when I was on my own I would have been really stuffed!
Rent is ridiculous though. I pay £1350 for a (nice) one bed flat and doubt i will be able to afford a 2-3 bed in London. In 10 years your monthly payments will look cheap. Fingers crossed.
We bought at the very top of our budget - we're not SE but we're supposedly in the most expensive area outside of the SE according to The Times! I worry pretty much constantly about it, but its the lesser of two evils. For us, the location & potential to extend were the primary concerns - if we hadn't have bought this house, I'd have worried we weren't in the right catchment for schools, or that we'd never be able to move to a house to a growing family. We're pretty much at the lowest level of income we'll be (hopefully) - me p/t hours with nursery fees etc. Hopefully we're nearly through the 'lean' years so we can stop fretting quite so much!
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